Advertisement

1929 vs 2014: Another Scary Stock Market Chart

The chart below from this story over at Marketwatch is getting a good deal of attention lately for reasons that should be obvious to even the most casual observer.

It’s important to note, however, that while the path traced out by the two curves is similar, the scale is decidedly not. The current period full scale (on the left) represents an increase of about 45 percent from the lowest value while the right scale is about six times that.

Stated another way, while the 1929 stock market crash traced out above is a decline of almost 50 percent, if the red curve (representing the Dow today) follows the black one down, that would be a loss of less than 25 percent.

That’s still probably a lot more than most stock investors could bare and, once again, it’s worth pointing out the cruel laws of percent change where a 25 percent decline would wipe out all of last year’s 30 percent gain for the Dow – and then another few percentage points.

About The Author

As you may have already deduced, this is not your typical financial blog, accompanied by some run-of-the-mill investment newsletter, and I’m not your typical financial writer.

In fact, I spent my entire working career as an engineer before retiring back in 2007 at the tender young age of 46. Two years prior to that in 2005 I started writing a blog – The Mess That Greenspan Made – mostly just to poke fun at the housing bubble and the policy makers who had led us down that path.

Details about the investment newsletter and information about the performance of the associated “model portfolio” can be found here and if there are any questions that I can help answer, just send mail to tim@iaconoresearch.com.